Join the Conversation

Johnson County hotel tax plan fuels debate; vote Jan. 13

By Vic Ryckaert
Published 12:08 a.m. ET Jan. 4, 2014

Phil Klaus, general manager of the Candlewood Suites at 1190 N. Graham Rd., Greenwood, is opposed to Johnson County's proposed 5 percent tax on hotel guests to support tourism efforts. Shown on Thursday, January 2, 2014, Klaus says the cost would have a deep impact on his business.(Photo: Star photo)

Tucked in an empty field off Interstate 65 and County Line Road on Greenwood's Eastside is the Candlewood Suites, a hotel at the center of a debate over a possible innkeeper's tax in Johnson County.

Candlewood Suites Manager Phil Klaus said he has been capitalizing on a big advantage — his guests pay 10 percent less tax than at hotels in Marion County.

That could change. Johnson County officials are considering joining the neighboring Central Indiana counties and instituting a hotel tax that would fund tourism efforts. The county council is expected to vote on a proposed 5 percent hotel tax on Jan 13. If it passes, the measure likely would need a second vote in February before it becomes official.

Supporters say the county is losing out because it alone in the nine-county metropolitan area does not levy the hotel tax and does not have a convention and visitors bureau working to bring business into the area.

"There's no question we're at a competitive disadvantage right now," Council Member Loren Snyder said.

While neighboring counties tout their amenities with user-friendly websites, brochures, billboards and advertising, Johnson County does nothing.

Indiana allows counties to collect the innkeeper's tax of up to 5 percent. The money must be spent to promote local tourism through brochures, websites and other marketing efforts.

Some counties have won state approval to charge a higher tax. Hendricks County has an 8 percent innkeeper's tax. Marion County's tax is 10 percent.

Even if it adopts the tax, Johnson County hotel guests will still pay lower tax than Marion and Hendricks counties, but Klaus notes that he'll lose some business.

But the discount may not be enough for some guests, Klaus said, who will ask themselves: "Am I going to drive an extra 10 miles for a 5 percent discount?"

There are 16 hotels and five bed and breakfasts in Greenwood and Franklin. The proposed tax, paid by hotel guests, would bring in an estimated $680,000 a year to Johnson County tourism efforts.

Supporters say Johnson County would use the money to hire a staff and launch a coordinated marketing campaign that would draw visitors to the dozens of local attractions, 14 golf courses, 100 restaurants and 29 community events.

Someday, supporters say the money could fund a convention center or a similar attraction that would bring visitors to the county.

Later this year, Greenwood is scheduled to break ground on a $10 million water park that's expected to open in 2015. Supporters say tourism efforts would draw visitors to other Johnson County attractions such as the Mallow Creek Winery in Bargersville, Oaken Barrel Brewing Company in Greenwood or the Historic Artcraft Theatre in Franklin.

One Ball State University study found that a county reaps $15 for each $1 it spends on tourism.

Visitors may come for a day and will spend money on gas, restaurants and at Greenwood Park Mall and other retailers, but Klaus said they are not likely to stay overnight. Hotels, Klaus said, are footing the bill but they won't see any profit from the tourism spending.

"Johnson County currently does not have that type of destination attraction to bring in people," Klaus said. "If I knew I was going be able to make my money back or at least break even I would have no problem with this."

Candlewood caters to business clients on extended stays. Many of the guests sign contracts and lock in rates months in advance. Raising the tax, Klaus said, means the hotel would be unable to pass the increase on to many guests until it is time to renegotiate the contract.

Supporters note that Johnson County's hotels have been enjoying their competitive advantage for years as neighboring counties have adopted the hotel tax. Meanwhile, they say, Johnson County has fallen farther behind in its marketing and tourism.

"If you stay at a competitive disadvantage too long, you become irrelevant," Snyder said. "I don't want Johnson County to become irrelevant."